The United States of America is said to impose huge tariffs on Indian exports, affecting goods worth around $48.2 billion. The increase in tariffs comes between ongoing trade tensions and is expected to hit different sectors across the Indian economy, with pharmaceuticals seen as the most vulnerable sector.
Commerce Minister Jatin Prasada told Parliament that roughly 55% of India’s exports to the US will face a combined 50% tariff burden when new penalties take effect on August 27. This move comes under President Donald Trump’s rationale to correct trade imbalances and penalise India’s purchase of Russian oil. This announcement has raised a lot of concerns about the future trade relations between India and America.
Pharmaceutical Sector At Greatest Risk
While Indian pharmaceuticals are currently not included in the tariffs, experts warned that the sector could be heavily affected if additional penalties are extended to truck products. Fish ratings highlighted that the US is a key market for Indian drug makers, supplying nearly half of America’s generic medicines. Between April 2024 and February 2025, India exported $9.8 billion worth of pharmaceutical products to the US.
Major companies like Biocon Biologics derive about 40% of revenue from the US sales. Sun Pharma, Lupin, and Laurus Labs also have a lot of exposure, earning 32%, 37% and 17% of the revenue from North America, respectively. Analysts say that if tariffs hit pharmaceuticals, these firms could face operating pressure.
Government Response and Migration Efforts
The Indian government has criticized the US tariff measures as unfair, unjustified, and unreasonable. Officials are taking some steps to protect farm workers and small business owners from a trade disruption. Measures include export promotion schemes and diversification into new markets to reduce the dependency on the American market.
Prime Minister Narendra Modi has emphasised that India will not compromise on the interests of farmers, even if it comes with economic costs. BJP leaders have also suggested that India’s domestic consumption-driven economy could limit the overall impact of US tariffs.
Trade Talks Remained Stalled
Negotiations between India and the US have stopped for now, with the scheduled talks from August 25-29, postponed indefinitely. Disagreement over access to India’s agricultural and dairy market and pressure to stop Russian oil imports have blocked all progress. Earlier targets to finalise a bilateral trade agreement by fall 2025 and double trade to $500 billion by 2030 now face uncertainty as new tariffs come into effect.
FAQs
- When will the New US tariffs on Indian exports take effect?
The additional tariffs are set to begin from August 27, 2025, on Indian goods.
- Which sector is most at risk from the US tariffs?
The pharmaceutical sector is considered the most vulnerable at this point.
- How much of India’s export to the US will be affected?
About 55% of total exports to America will face the tariff burden
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